Climate advocate Greta Thunberg has accused developed economies of “creative carbon accounting,” because their measures of greenhouse gas (GHG) emissions, and of achieved and planned reductions, fail to consider the gases emitted when imported goods are produced in other countries.
As Chinese officials have quite rightly pointed out, about 15 percent of their country’s emissions result when goods are made in China, but consumed in other, usually richer, economies.
China and other developing economies also are instinctively wary of developed-country proposals to combine domestic carbon prices with “carbon tariffs” imposed on imported goods.
However, such policies might be the only way for rich-world consumers to take responsibility for their carbon footprint in other countries.
The “creative accounting” charge would be unfair if it were meant to imply deliberate concealment; the British government, for example, publishes an easily accessible carbon-footprint report.
However, the figures certainly support Thunberg’s point: In 2016, the UK emitted 784 million US tons (711 million metric tonnes) of GHGs on a consumption basis, versus 468 million tons on a production basis.
From 1997 to 2016, the UK’s consumption-based emissions fell by only 10 percent, compared with a 35 percent decrease in production-related emissions.
Likewise, the EU’s total consumption-based emissions are about 19 percent higher than those related to production.
While the US’ gap of 8 percent is smaller in percentage terms, on a tons-per-capita basis it is just as large.
China is easily the biggest counterpart to this developed-economy gap, with consumption emissions of about 8.5 gigatons per year, versus 10 gigatons on a production basis.
While China’s per capita emissions have already overtaken the UK’s on a production basis, it would be several years before the country’s per capita consumption footprint exceeds that of the UK.
So, if the developed world is serious about limiting potentially catastrophic climate change, it must take responsibility for emissions that its consumption generates abroad.
There are only two ways to do this. One is for the rich world to consume less. However, although more responsible lifestyles — buying fewer clothes, vehicles and electronic goods, or eating less red meat — should certainly play a role in making zero-carbon economies possible, such changes alone would not get us close to zero emissions.
Nor would they necessarily close the consumption-versus-production gap, because consumption of domestically produced goods could fall as much as that of imports. Reduced imports by developed countries mean reduced exports for poorer economies, creating challenges for economic development.
The alternative is to ensure that imported goods are produced in a low and eventually zero-carbon fashion. The ideal policy to achieve this would be a globally agreed carbon price, which would encourage producers in all countries to adopt low or zero-carbon technologies.
Absent this ideal, there are growing calls in Europe and the US for a second-best solution — domestic carbon prices imposed in particular countries plus “border carbon adjustments,” meaning carbon-related tariffs on imports from countries that do not impose an equivalent carbon price on their producers.
The immediate reaction of policymakers in China, India and many other developing countries might be to condemn such policies as yet more protectionism in a world already destabilized by US President Donald Trump’s tariff disputes.
Anti-Chinese political rhetoric in the US — sometimes including the absurd accusation that China is an irresponsible polluter even though its per capita emissions are half those of the US — creates a difficult environment for rational policy assessment.
However, in most industries, the combination of domestic carbon prices and border carbon tariffs poses no threat to the competitiveness and growth prospects of exporting companies in developing economies.
Imagine that European steel producers were subject to a new carbon tax of 50 euros (US$54) per ton of carbon dioxide within Europe, which also applied to imports of steel from China or anywhere else.
In that case, the relative competitive position of European and foreign steel producers seeking to serve European customers would be unchanged compared to the no-tax starting point.
Chinese or Indian steelmakers, or firms in other high-emission sectors, are as well placed as their European or US peers to adopt new technologies that reduce the carbon content of their exports (and thus their liability to border carbon taxes).
Indeed, domestic carbon prices plus border adjustments are simply an alternative route to achieving the international level playing field that ideally would be secured through a global carbon price applied simultaneously in all countries.
There is one crucial difference, though: If carbon taxes are imposed at the importing country’s border, rather than within the exporting country, then the importing country gets to keep the tax revenue.
That increases the incentive for exporting countries to impose equivalent domestic carbon taxes, rather than leaving their companies to pay taxes at the importing country’s borders. As a result, domestic carbon taxes with border adjustments could well prove to be an effective stepping-stone toward common global carbon prices, even if explicit international agreement on a global regime cannot be achieved.
Furthermore, such an approach suggests a potentially attractive way to encourage wider acceptance of border tariffs as being legitimate, necessary, and unthreatening.
To be sure, the revenues from any carbon taxes levied on domestic producers should be used within the domestic economy — whether to support investment in low-carbon technologies or as a “carbon dividend” returned to citizens.
However, there is a good argument for channeling the revenues from carbon tariffs to overseas aid programs designed to help developing countries finance their transition to a zero-carbon economy.
Thoughtful developing-economy negotiators should argue for such revenue transfers, rather than opposing a policy that developed countries will have to deploy.
After all, richer economies must not only drive down their own industrial emissions, but also take responsibility for those that their consumption is generating elsewhere in the world.
Adair Turner, chair of the Energy Transitions Commission, was chair of the UK Financial Services Authority from 2008 to 2012.
Copyright: Project Syndicate
With escalating US-China competition and mutual distrust, the trend of supply chain “friend shoring” in the wake of the COVID-19 pandemic and the fragmentation of the world into rival geopolitical blocs, many analysts and policymakers worry the world is retreating into a new cold war — a world of trade bifurcation, protectionism and deglobalization. The world is in a new cold war, said Robin Niblett, former director of the London-based think tank Chatham House. Niblett said he sees the US and China slowly reaching a modus vivendi, but it might take time. The two great powers appear to be “reversing carefully
As China steps up a campaign to diplomatically isolate and squeeze Taiwan, it has become more imperative than ever that Taipei play a greater role internationally with the support of the democratic world. To help safeguard its autonomous status, Taiwan needs to go beyond bolstering its defenses with weapons like anti-ship and anti-aircraft missiles. With the help of its international backers, it must also expand its diplomatic footprint globally. But are Taiwan’s foreign friends willing to translate their rhetoric into action by helping Taipei carve out more international space for itself? Beating back China’s effort to turn Taiwan into an international pariah
Typhoon Krathon made landfall in southwestern Taiwan last week, bringing strong winds, heavy rain and flooding, cutting power to more than 170,000 homes and water supply to more than 400,000 homes, and leading to more than 600 injuries and four deaths. Due to the typhoon, schools and offices across the nation were ordered to close for two to four days, stirring up familiar controversies over whether local governments’ decisions to call typhoon days were appropriate. The typhoon’s center made landfall in Kaohsiung’s Siaogang District (小港) at noon on Thursday, but it weakened into a tropical depression early on Friday, and its structure
Since the end of the Cold War, the US-China espionage battle has arguably become the largest on Earth. Spying on China is vital for the US, as China’s growing military and technological capabilities pose direct challenges to its interests, especially in defending Taiwan and maintaining security in the Indo-Pacific. Intelligence gathering helps the US counter Chinese aggression, stay ahead of threats and safeguard not only its own security, but also the stability of global trade routes. Unchecked Chinese expansion could destabilize the region and have far-reaching global consequences. In recent years, spying on China has become increasingly difficult for the US
RSS